Minnesota Retirement Taxes (2026): SS Rules & the $3M Estate

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: Minnesota is one of the few states that still taxes Social Security — but only above income thresholds: the subtraction is full when AGI is at or below roughly $84,490 single / $108,320 married (TY2025, indexed), then phases out 10% per $4,000 of additional income, disappearing above roughly $120,490 / $144,320. Pension, 401(k) and IRA income is fully taxable at graduated rates of 5.35%–9.85%. And at death, Minnesota’s estate tax starts at a $3,000,000 exclusion frozen since 2020, with rates of 13–16% and no spousal portability — despite what some aggregator sites claim.

How Minnesota taxes retirement income (statute-cited)

Income tax	Graduated 5.35%–9.85% (4 brackets)
Social Security	Partially taxed: full subtraction at AGI ≤ ~$84,490 single / ~$108,320 MFJ (TY2025, indexed); phases out 10% per $4,000 above; fully taxable above ~$120,490 / ~$144,320 (Minn. Stat. §290.0132). Watch for guides quoting 2024’s lower thresholds as current
Pension / 401(k) / IRA	Fully taxable; the only carve-out is the qualified public pension subtraction — up to $12,500 single / $25,000 MFJ (indexed, income-tested) for public pensions from non-Social-Security-covered government employment
Military retirement	Full subtraction (or an elective credit instead) — Minn. Stat. §290.0132
Inheritance tax	None

The estate tax: frozen exclusion, no portability

Minnesota’s exclusion has sat at $3,000,000 since 2020 with no inflation indexing, while rates run 13%–16%; a qualified small-business/farm property deduction can add up to $2,000,000 (combined maximum $5,000,000). The official 2025 Form M706 instructions (published January 2026) confirm all of this — and contain no spousal portability provision: the portability bills (SF 30 / SF 1271) were not enacted, despite aggregator sites claiming otherwise. Married couples here still need credit-shelter planning that federal portability made obsolete elsewhere. Full table: estate tax by state.

Probate costs

Minnesota is a UPC reasonable-compensation state (Minn. Stat. §524.3-719) — no percentage schedule. Small estates: $75,000 (net of liens) of personal property by notarized affidavit with a certified death record, after a 30-day wait (Minn. Stat. §524.3-1201). Opening probate runs about $310–$365 in district court filing and law-library fees. Context: probate cost by state · small-estate limits by state · will vs. trust calculator.

Is Minnesota a good state to retire in for taxes?

Candidly: one of the harder states on this series’ measures. Moderate-income retirees do fine — Social Security fully subtracted under the thresholds and rates that start at 5.35%. But higher-income retirees face taxed Social Security, fully-taxed withdrawals at up to 9.85%, and an estate tax that reaches $3M estates — frozen, unported, and increasingly easy to hit with a paid-off home plus retirement accounts. Minnesotans who stay do so for reasons beyond taxes; the planning that matters here is estate-side.

Minnesota vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Minnesota	Partially taxed (income-tested subtraction)	Fully taxable; public-pension subtraction only	Yes — $3M exclusion, frozen	None
Wisconsin	Not taxed	Exclude up to $24,000/person at 67+ (2025 Act 15)	None	None
Michigan	Not taxed	Deductible up to ~$67,610/person (2026)	None	None
Florida	Not taxed	Not taxed (no income tax)	None	None

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Minnesota may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Minnesota

Per the SEC’s July 2026 Investment Adviser roster, Minnesota has 274 SEC-registered advisory firms (#16 nationally) managing $2.43 trillion (#13 by AUM). Full breakdown: Minnesota advisor statistics. Reviewing fee structures before or after a move: fee-drag calculator.

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Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Minnesota:

Leaving Minnesota? See leaving Minnesota in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Minnesota

Minnesota sets probate compensation by a “reasonable fee” standard with no percentage schedule, so anyone quoting a firm figure is estimating. And the small-estate shortcut of $75,000 does not clear a solely owned house on its own, which is the detail most guidance omits. Full detail with the governing statute, the court filing fee and the threshold: Minnesota probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Minnesota Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/minnesota-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Minnesota Retirement Taxes (2026): The Social Security Phase-Out, Fully-Taxed Withdrawals, and the Frozen $3M Estate Exclusion